Make landscape fade with distance
The simplest method of creating mist is to simply use the Compositor to use the Z pass to control a Mix Color node.



The Divide node should be set to the range of the required mist in Blender Units - ie, the distance between the point where there is no mist to where the mist is fully obscuring the scene. The Subtract node can be set to indicate where the mist starts - with zero being at the camera and 1 being the distance specified in the Divide node. The color of the mist can be set in the Mix node.

EDIT : The above screenshot (and the one below) have Clamp enabled on each of the Maths nodes. While this appears to work in my specific example it will cause problems with different values and as the Subtract gets closer to ‘1’. Only the last node in the chain should be set as Clamp - so in this case just the Subtract node - otherwise the clamping on the previous nodes interferes with the result.

The Blend file linked in the question seems to be empty so here is a simple forest scene to use as a demonstration.



Varying the Divide node to control the depth of mist can produce different apparent density of mist.



Varying the Subtract node changes the 'closeness' of the mist.



Using a dark color can also be quite effective for a night scene (with local light).